Information communication technology (ICT) group Mustek said its performance remained under pressure in the second half of 2024, with the group delivering a weaker set of interim financial results as it navigates a proposed takeover by Novus.
Mustek reported headline earnings per share for the six months to end-December down 74.31% year on year to 23.47c, as revenue fell 14.1% to R3.66bn.
The company is an assembler and distributor of ICT products, and was established in 1987, with its brand portfolio including Acer, Asus, Samsung and Lenovo.
Operating profit was nearly 50% lower than in the second half of 2023, reflecting ongoing challenges with global and local economic conditions, said the company.
Mustek attributed the drop in profit to persistent inflation, elevated interest rates, sluggish economic growth and fluctuating consumer confidence in SA and abroad.
The group said reducing finance costs, a focus area over the past two years, remained a priority, with some encouragement coming from a 23.2% reduction in net finance costs to R83.3m.
While interest rate cuts towards the end of last year provided some relief, most of this improvement was attributed to a reduction in working capital, which fell R637m over the six months.
“This helped significantly improve liquidity and strengthen our financial position,” said Mustek, which expects the IT industry to experience improved growth this year, driven by increased spending on data centres, cybersecurity solutions and the emergence of new use cases for AI which promise greater returns on investment.
“Though the economic climate remains challenging, we are cautiously optimistic of improved conditions in the future as these trends and developments evolve.
“Specifically, a return to normal replacement cycles, increased spend on cybersecurity and growth in infrastructure and devices to derive tangible benefit from AI,” said the group.
Last month, the Competition Commission recommended that Novus’ proposed takeover of Mustek be approved, with Novus having acquired a 35% stake in the company last year.
The two groups plan to issue a joint circular on March 14 which will lay out the terms of the Novus offer and inform Mustek shareholders of “the manner in which the offer may be accepted by them and the manner in which the offer will be implemented”, said Mustek.
The group declared an interim dividend of 7.5c per share.
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